What a wild week this has been. So many things happening that it’s hard to concentrate on just one topic, so let’s just do some brief takes on several of them:
Permitting Reform a No-Go? – Early this week, I questioned whether Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi would really be willing to follow through on their commitment to help West Virginia Senator Joe Manchin move a permitting reform bill. The willingness of congressional Democrats to support such a measure seems tenuous, especially if it draws serious opposition from environmentalist groups that help fund their election campaigns.
As if on cue, Manchin’s effort drew fire on Wednesday from a coalition of climate-focused activist groups calling itself the Green New Deal Network (GNDN). In an email, GNDN slams the thus-far unseen Manchin bill as not being “vested in the values of clean, renewable energy spurred by the IRA (the mis-named Inflation Reduction Act), and which has “the potential to undermine the benefits of the most critical climate provisions in the IRA.”
Thus, the answer from the environmentalist lobby on this bill whose language hasn’t even been released is that it is dead on arrival. Which should really come as no surprise to anyone, though it remains a mystery how these same groups think their chosen wind, solar and electric vehicles industries are going to source the array of critical minerals they must have in order to grow without reforms to America’s Byzantine permitting processes.
The Friendship State No Longer Friendly for ESG – Texas Comptroller Glenn Hegar announced late Wednesday that his office would follow through to enforce the provisions in a new state law enacted last year that prevents ESG-focused investor groups that discriminate against the Texas oil, gas and coal industries from maintaining positions in the state-run teacher’s retirement system and other funds.
In addition to ESG sector leader BlackRock, Hegar’s office singled out the following:
- French banking group BNP Paribas SA;
- Credit Suisse Group
CS
AG; - UBS Group AG;
- Danske Bank A/S;
- Jupiter Fund Management PLC;
- Finland-based Nordea Bank ABP;
- Schroders PLC, a British multinational asset management company;
- and two banks based in Sweden, Svenska Handelsbanken AB and Swedbank AB.
In a statement, BlackRock responded by saying that “This is not a fact-based judgment. BlackRock does not boycott fossil fuels — investing over $100 billion in Texas energy companies on behalf of our clients proves that.”
Of course, the point is not whether BlackRock or these other firms “boycott” fossil fuels, but whether they discriminate against companies engaged in the Texas oil and gas and coal sectors, which they clearly do. That’s not even an arguable point, which is no doubt why BlackRock’s statement avoided it, and Texas has decided to punish the behavior. Whether it will have any significant impact aside from the dueling press releases remains to be seen.
Command and Control is California’s Future – While Texas was moving to support its oil & gas industry, California’s Air Resources Board was moving to further disadvantage it, promising to implement regulations to outlaw the sale of gas-powered cars in the state by the year 2035. The move, anticipated to be formalized on Thursday, follows on the target set by Gov. Gavin Newsom in 2020.
The myriad practical difficulties in implementing such a plan don’t seem to matter to California’s policymakers – they appear to believe they can just force markets and companies to comply via authoritarian, command-and-control edicts. They could be right, but it will all come at an enormous cost to California consumers.
GM is Certainly On-Board – In a recent interview with Bloomberg Green, GM Chair and CEO Mary Barra made clear that her company is fully on board with both the ESG philosophy and the California approach to picking winners and losers in the marketplace via government control. Moreover, Ms. Barra tells Bloomberg that her company is doing it all in an “equitable” manner.
Not only does Barra expect GM to be “carbon neutral” by 2040, she says her Equitable Climate Action Plan will make GM “the most inclusive company in the world.”
“As for climate equity,” she continues, “that’s about having no one left behind as we accelerate to an all-electric future.” No word yet on how that “equity” will be applied to the millions of Americans who can’t afford to pay the average U.S. price for an EV of $66,000, but we can be sure it will all be handled in a fair and equitable manner by the most inclusive company in the world.
OPEC+ Says ‘Not So Fast’ to Falling Oil Prices – Finally, just when Americans were seeing some relief in prices at the gas pump, Saudi Energy Minister Prince Abdulaziz bin Salman signaled to markets that OPEC+ will consider cutting production to stabilize global oil markets. His remarks sent the international Brent price back over $100 per barrel and West Texas Intermediate, which had recently fallen as low as $87, back over $95.
“The suggestion that the price did not align with fundamentals and that OPEC+ could cut output has clearly had the desired effect,” Oanda analyst Craig Erlam was quoted in a Reuters story. “It may also make the chance of a move back below $90 in the near-term hard to come by unless a nuclear deal is agreed upon and OPEC+’s appetite for cuts put to the test.”
Like it or not, the ministers in OPEC+ remain beyond the regulatory and legislative reach of U.S. commanders and controllers.
